Macro Morning

See the latest Australian dollar analysis here:

Australian dollar climbs with global stock surge

More lockdowns across Europe and less risk taking saw Wall Street fall overnight with tech stocks leading the way again as the USD firmed against everything with Pound Sterling and Euro making new weekly lows although Yen remained firm. Treasury yields fell back well below the 1.70% level in response to very poor US home sales data while oil prices slumped with Brent down over 5% under the weight of less European demand.

Bitcoin remains under enormous pressure here, flopping below its four hourly trend line and remained below the $55K overnight, almost taking it back to last week’s low. It seems resistance is too much in the short term:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite finished nearly 1% lower at 3411 points as it took back all of the previous gains while the Hang Seng Index followed in kind, down 1.3% to 28497 points. The daily chart is showing a clear break of the rectangle of tight support and resistance couldn’t be cleared, as the bearish bias on momentum and price action point to falls ahead:

Japanese markets however were holding fast with the Nikkei 225 going into the close but then stumbled, falling nearly 0.7% to make good (bad?) on the previous 2% losing session previously. closing at the 28995 point level. Futures are pulling back fast with risk appetites waning with price now hovering on the recent daily lows below the 29000 point level with the USDJPY pair suggesting further downside ahead on a rush to Yen buying:

The ASX200 put in a scratch session, down just 0.1% point to be at 6745 points. If SPI futures are to  be believed, its going to be a relatively quiet open, down only 10 points or so, although the late lead from Wall Street is likely to see the 6700 point level come under attack again:

European markets are still all over the place in response to the Turkish ructions with peripherals rebounding while the FTSE fell on the lower Pound and the German DAX put in a scratch session, unchanged at 14662 points. This keep it nominally on trend on its breakout above the 14000 point level but I continue to watch for a potential topping action here with support key at the 14400 point area:

Wall Street continues to signal hesitation despite stimulus packages aplenty with the latest home sales data and European lockdowns outweighing, the S&P500 finishing 0.7% lower at 3910 points, hovering just above the key 3900 support zone. The four hourly chart shows that fill at just below the 3900 support zone has been wasted with momentum flat lining and ready to push into oversold and that means at least a retest of last weeks low at 3880 points:

Currency markets are seeing yet another reversion in USD machinations with the latest switch of Euro now collapsing below the 1.19 level to almost match its previous weekly low. As I said yesterday, the bearish double top pattern from the last two weeks remains in full as this was just a short burst up but not through the very strong 1.20 resistance level – watch for an ominous fall below the 1.18 handle next:

The USDJPY pair is still deflating as it finds new session lows on the four hourly chart, with price now pushing below the previous 108.80 anchoring level to almost text the 108 handle proper overnight. I was considering a breakout above the high moving average here on overall USD strength, but it appears safe haven buying is more prevalent as the risk off mood widens:

The Australian dollar was a big casualty last night, falling sharply through the 77 handle after a very tepid start to the trading week. I considered the 77.30 ATR support level as critical yesterday and here we are at the low 76’s, ready to make new weekly lows as commodity prices deflate fast:

Oil prices are now in near freefall as more lockdowns on the European continent take a scythe to demand with Brent crude losing over 5% in a single session overnight, falling to just below the $60USD per barrel level. ATR daily and psychological support at $60-61 has been broken with more price downside to be expected as traders reverse their positions:

Gold is still unable to get off the deck, still not making any substantial new daily high, closing lower overnight to the $1726USD per ounce level. I still contend this short term bounce is likely just a short covering move that is likely to hit very strong resistance at the $1770 level – even lower going by these very small moves – with the longer term chart signalling the next downside target at the 2019 pre-breakout highs around $1500:

 

 

Glossary of Acronyms and Technical Analysis Terms:

ATR: Average True Range – measures the degree of price volatility averaged over a time period

ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility

CCI:  Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)

Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement

FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)

DOE: US Department of Energy 

Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!

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